2010: RIP RFPs

Madison Avenue is infamous for generating expensive, overwrought creative presentations that hijack agency resources and time for days (if not weeks). Under this model, when responding to a Request for Proposal (RFP) generated by the potential client, agencies compete and the winner is rewarded with a long-term retainer that justifies the energy expended on the pitch.

Nowadays, these long-term engagements are few and far between, partly due to the tenuous state of the economy.

Risk vs. reward

The pitching business is a risky business. After a very short interaction with the prospective client, the agency is given one shot to develop ideas to dramatically and positively affect the clients business. The resources and time dedicated to a new business pitch often dramatically cuts into the profitability of the job (if it is won). If the agency is not chosen, all that work is likely to be forgotten and buried in a dusty server file.

The pitch is shifting

“Pitching is the nature of the beast,” says Paige Arnof-Fenn, founder and CEO of Mavens and Moguls, a Cambridge-based marketing company. “However, the balance has shifted away from long-term retainer engagements to more discrete projects that have a defined beginning, middle and end.”

Although Arnof-Fenn recognizes that 2010 has potential to be stronger than the last couple of years, she believes that most companies now have a comfort level with starting with smaller projects and continuing that trend through the life of the relationship. Even if, at the end of the year, the dollars spent are comparable or even more than what would have been spent had the client signed a retainer, many businesses prefer this hopscotch approach, tackling one box at a time.

Spreading projects out

http://www.vimeo.com/5703121Arnof-Fenn believes budget cuts and budget accountability are further ramifications to the challenging economy, “A lot of CMOs and CEOs used to have autonomy and authority to make significant business decisions. However, now they are held to a higher degree of scrutiny that translates into less freedom to make independent decisions.”

The Board of Directors could get involved in decisions if the contract dollars are large enough, and rather than schedule time at a Board meeting to discuss marketing, CMOs and CEOs skirt the issue, and the red tape, by agreeing to multiple projects for smaller dollars, spread throughout the year.

Building relationships

OTW Advertising in Winchester, MA was operating on 75% retainer at the start if 2009 and by the end, it was 35% of the total revenue. “Figuring out the new way to acquire business took time,” Cindy Hale, president, “I had to find the balance between new sales, ongoing client support and family. As a rule now, we do not respond to RFPs.

Putting agencies in a black box and asking them to design creative in a couple weeks is not the best way to judge the fit. I suggest companies spend time with prospective agencies and their teams, talk to clients and then make a decision. It will prove more successful in the long run.”

Next time …

If companies are not requesting formal RFPs from multiple agencies, then how is agency business generated? And is there a benefit to companies and agencies to multiple smaller jobs as opposed to one longer-term retainer? That is the focus of my next story. What are your business outreach techniques and how are they evolving?

About the author

Rebecca Garnick Ast -

Rebecca brought her passion for strategic brand development to Tippingpoint Labs in early 2010. As Brand Director, her role includes championing the focused growth of the agency through mutually beneficial partnerships and results oriented initiatives that help strengthen brand credibility, reach and influence.

A skilled marketing executive, Rebecca has successfully built both entrepreneurial and established brands. Through business-driven marketing programs and partnerships with worldwide leaders including Rolex, Ogilvy, P&G and Wal-Mart, she has championed increased revenue and decreased customer acquisition costs. Coupled with her entrepreneurial experience at Streamline.com, LifeClips and RunMyErrand,  she has a well rounded, flexible and thorough marketing approach

She earned an MBA from Babson College where she focused on entrepreneurship, opportunity identification, marketing and consumer behavior.

"Consumer behavior in the digital space is evolving. The only way to be successful is to deliver the right message, apply the right media, and distribute on the right channel. TPL is securely positioned to deliver on this promise of building branded relationships that lead to measurable results."